Indian Rupee gives back gains as US Dollar recovers

The Indian Rupee recovers further against the US Dollar as the latter underperforms.
Signs of US-Iran war de-escalation have diminished the US Dollar’s safe-haven demand.
FIIs’ buying streak in the Indian stock market comes to an end.

Sagar Dua FXStreet

The Indian Rupee (INR) gives back its early gains against the US Dollar (USD) in India's afternoon trading hours on Friday. The USD/INR pair rebounds to near 95.42 as the US Dollar bounces back amid fears that the restart of the war in the Middle East between the United States (US) and Iran will be prolonged.

As of writing, the US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades marginally lower to near 100.86 after recovering from its three-week low of 100.60.

US-Iran war will likely be prolonged

Late Thursday, the Iranian state media confirmed that US forces struck several more locations in coastal Iran. This week, several media outlets have confirmed that the US has attacked Iranian power and water infrastructure. This came even as a US official confirmed that technical talks with Iran are still going on, according to The Times of Israel.

The aggression between the US and Iran restarted after President Donald Trump declared that the Memorandum of Understanding (MoU) with Tehran is over.

Fears of energy supply disruption remain elevated amid US-Iran tensions

The oil price extends its correction on Friday even as fears of prolonged US-Iran aggression remain intact. In the European trade, the WTI Crude Oil contract expiring on July 20 holds onto Thursday's losses near Rs. 6,845.

Currencies from economies, such as India, which rely heavily on oil imports to meet their energy needs, tend to underperform in a high-oil-price environment.

FIIs turned net sellers on Thursday

After remaining net buyers in all trading days of July 3-8, Foreign Institutional Investors (FIIs) turned out to be net sellers on Thursday, offloading their stake worth Rs. 532.86 crore in the Indian stock market.

Moving forward, investors should be prepared for mixed sentiment from overseas investors toward the Indian equity market, as the earnings season of the first quarter of the financial year (FY) 2026-27 has kicked off, with quarterly results from India’s tech giant Tata Consultancy Services (TCS) on Thursday.

Technical Analysis: USD/INR needs to break above 96.00 for fresh upside

USD/INR trades almost flat at around 95.45. The pair holds a mild bullish bias as it trades above the 20-day exponential moving average (EMA) at 95.11.

The Relative Strength Index (RSI) staying inside the 40.00-60.00 zone for a long period, with signs of fatigue after a descending triangle breakout, suggests a subdued trend ahead.

On the downside, immediate support is seen at the 20-day EMA near 95.11, ahead of the former descending trendline break around 94.69, followed by the May 7 low at 94.03. On the topside, a more meaningful resistance reference remains the original descending trendline anchor near 97.02, and only a sustained break above that area would open the door to a stronger bullish extension.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Author

Sagar Dua

FXStreet

Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.

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